Funds in super contest

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The big industry funds are believed to be planning a $30 million-plus marketing and advertising campaign to counter commercial funds.Photo: Louie Douvis

Industry funds are discussing a marketing campaign to
keep members once choice-of-fund reforms start.

A superannuation showdown is looming as most of the nation's
biggest industry funds, with assets totalling more than $70
billion, are set to agree on their first campaign to counter an
anticipated push for members from commercially owned super
funds.

About 16 funds, accounting for 80 per cent of the sector's
members, are set to unite for a marketing and advertising campaign
in the run up to the Federal Government's choice-of-fund reforms,
starting next July 1, which are expected to change the super
industry.

While nothing has been signed, it is believed the funds are
discussing a $30 million-plus marketing campaign - with the likely
advertising company to be Shannon's Way - a break in tradition for
an industry noted for its low profile and low costs.

Garry Weaven, executive chair of Industry Fund Services, said:
"There could be a significant chunk of market share moving around.
It is almost a social responsibility for us to tell our story."

From July 1, the banks and financial services groups will be
able to aim for members of industry funds, creating pressure on the
funds to market their products. So far, only the bigger industry
funds, such as the Australian Retirement Fund and Superannuation
Trust of Australia, have had low-key advertisements.

Industry funds have been advised that their commercial
competitors could be augmenting traditional marketing budgets with
special-project top-ups, taking the industry total to more than $55
million.

The Investment and Finance Services Association's deputy chief
executive, John O'Shaughnessy, dismissed the amount as
"extraordinary", adding that his association was more likely to
focus on a generic advertising campaign intended to boost financial
literacy.

Mr O'Shaughnessy, whose members have more than $655 billion
under management, said: "We expect that for those people able to
exercise the choice option, up-take will most likely occur when a
significant event, such as changing employers, gives cause to
review an individual's superannuation and retirements savings
strategy."

Industry funds have recently received a top billing in the
influential superannuation ranking tables, taking all top 10
positions in the platinum category of SuperRatings listings.

This puts them in a strong position to compete against the
retail super funds and master trusts.

The additional cost of advertising is expected to reduce total
returns for a sector that has traditionally been able to offer
significantly lower fees because the industry funds don't have to
service capital, such as a return on equity for the shareholders of
the parent insurance company or bank.

Expectations that the new regime will accelerate the industry's
restructuring were recently given greater credence by the
announcement that the ARF and STA - which have combined assets of
about $12 billion and more than 1 million members - have held
merger talks.